Insurance Company Investment Strategy Review

Janet, the Chief Investment Officer at ABC Insurance Company, is in the process of reassessing the firm's investment approach to better align with its long-term liabilities and emerging regulatory standards. The company primarily invests in bonds, equities, and alternative investments.

During the review, Janet considers the implications of the Solvency II directive, which requires insurance companies in the EU to hold a certain amount of capital based on risk assessments of their assets. Additionally, Janet is contemplating the potential impacts of current interest rate trends on her company's fixed-income portfolio. Given these circumstances, she evaluates three possible strategies to optimize the portfolio.